Which IPOs are Coming Soon?

Summary

• Initial public offering is known as the process of a private company issuing new shares on a publicly traded exchange to investors in order to raise capital.
• Investing in an IPO can be lucrative for some investors due to getting the opportunity to invest in potentially underpriced stocks and other factors.
• 2021 has seen a boom in IPO listings on the LSE, driven primarily by the tech sector

As the economy begins to rebound, companies are also increasingly looking to publicly list on the London Stock Exchange. Companies’ raised £16.3 billion on the LSE in Q1 2021, the highest amount since 2007.

What is an IPO

The process of a private company seeking to raise capital by selling its shares to investors through issuing new stocks via a public platform is called an initial public offering (IPO) or going public.

While going public is a way to raise funds, it involves undergoing a lengthy process. Going public involves private companies to meet the rigorous requirements set by stock exchanges such as the LSE or its sub-market, the Alternative Investment Market (AIM).

In addition to the stringent requirement, private companies aspiring to float on the market must also hire investment banks to market the company, estimate investor demand, set an issue price and date and much more.

Also Read: Will the Exuberance in The London IPO Market Continue? 

Founders and early investors also often consider IPOs as an exit strategy from their company, as IPOs are often times used as a method to help realise profits from their early stage investments. 

Why invest in IPOs

There are several benefits to investing in an IPO. The most popular reason is investors get an opportunity to invest in potentially under-priced stocks at an early stage, thus enabling them to earn big in a short period of time.

IPOs are also an advantage to meeting long term investment goals as they can bring a high return on investment. IPOs also offer more price transparency to investors as the price per security is mentioned in the IPO order document.

Also Read: UK Residential REIT to Go Public on LSE, Many IPOs in Pipeline

IPOs to watch in 2021 

The LSE has already had some blockbuster IPOs listings in 2021 due to a boom in listings this year, driven mostly by the tech sector. Some of the major IPOs which have floated on the market this year are online greeting card, and gifting company Moonpig (LON:MOON), which listed at a valuation of around £1.2 billion in February, food delivery company Deliveroo (LON:ROO) had been valued at £7.6 billion at the time of listing, and review website Trustpilot (LON:TRST), which had been valued at around £1.1 billion at the time of the listing.

In addition to the above, there are several more companies that are set to go public this year. Some of the anticipated IPO listings in the UK this year are:

1. EG Group: UK-based retailer EG Group is expected to be a blockbuster IPO listing this year, after it acquired low cost supermarket chain Asda. The group had reported revenues fell from £22.4 billion in 2019 to £20.7 billion in 2020; however its earnings before interest tax, depreciation and amortization (EBITDA) rose by 48 per cent. It is valued at about around £10 billion
2. Brewdog: Craft beer brewer and bar operator firm Brewdog had been valued at approximately £1.5 billion. The firm has raised about £73 million in capital over the last six fundraising rounds as of April 2020. It recently raised about US$375,700 at the end of its February 2021 funding round. The company has announced plans to float on the market but is awaiting the right market conditions.
3. Wise: Fintech startup Wise was previously called as Transferwise, and has an estimated market cap between £4.4 billion and £5.1 billion. It has already hired investment banking company Goldman Sachs and Morgan Stanley to aid with the IPO listing.
4. Oxford Nanopore Technologies: Healthcare technology company Oxford Nanopore Technologies company is focused on developing products that help analyse DNA, RNA and more. It also developed products to track covid-19 variants. It has an estimated market cap of £2.3 billion.
5. Monzo: Online bank Monzo has an estimated valuation of £1.2 billion and serves about 4.8 million customers. It had previously received £60 million in its last funding round, which closed in December 2020. However, recent reports suggest it could have a valuation of about £4 billion in its next fundraising round.
6. Jaguar Land Rover: Luxury carmaker Jaguar Land Rover, whose parent company is India’s Tata Motors, is valued at roughly £2 billion. The company reported profits of £65 million in October 2020 despite facing covid-related issues. It showed a sharp increase from a loss of £413 million in the previous quarter. 

Also Read: Seraphim Space Investment Trust Plans World’s First Space Tech Fund IPO